By Team Tomorrow
Published August 9, 2021
The real estate market has been insane ever since the pandemic started. With so many people buying homes well above their market value, you may be pondering which is better: renting or buying?
Here are a few things to consider:
The market being heavily skewed in a seller’s favor, but balance will eventually be restored. In the meantime, you should figure out if renting or buying a house is better for you and your family.
Here are the pros and cons of both:
Leases usually last for 12-24 months at a time. If you’ve just moved to a new area or are not looking for long-term commitments, this flexibility is great to have. In some cases, you can even rent month-to-month or sublet a place for a shorter period.
As a renter, you usually can’t make any major changes to your home, like upgrading your appliances or repainting. At the end of your lease, your landlord can increase your rent if they so choose.
You have to pay a deposit and should keep your home in good condition. However, if the dishwasher or another major appliance breaks, your landlord is responsible for repairing it, not you. There are rare occasions where you might have to replace something, but you’re usually off the hook.
Making repairs isn’t your responsibility, but you’re subject to the landlord’s timeline — and they’re not always quick to fix things.
Renting can be cheaper than owning in the short term. The process is also much easier. You are usually only required to come up with the first month’s rent and a security deposit. That’s substantially less than a down payment.
When you’re renting, you’re paying someone else’s mortgage and property taxes without reaping the benefits.
When you own a home, it’s yours for as long as you want it. You can — usually — make any changes you want, and never have to worry about your rent increasing at the end of your lease.
The upfront costs can be steep. You need to come up with a down payment, closing costs, moving costs, property taxes, homeowner’s insurance, and an emergency fund.
Instead of paying someone else’s mortgage, you’re building equity. If you decide to sell, the amount you sell your home for is yours, minus the balance left on the loan and real estate agent’s fees.
If something breaks, there’s no landlord to fix it for you. You have to make your own repairs or pay someone to repair whatever’s broken.
Homeowners usually love tax season for all the deductions you can make. You can deduct:
If you’re buying a home and renting it out, you can also claim appreciation and depreciation.
The process of buying a home can be complex. However, if you co-own a home with your partner and you’re getting a divorce, dividing property can be even more complicated. Figuring out how to handle joint property can even be more taxing than the divorce itself.
It all depends on where you are in life. If you want to save up the money to buy a home you can call your own, you should do it! However, buying isn’t for everyone.
That said, it definitely has its benefits. Here’s one more buying pro to consider:
Because you own your home, you can give it to a beneficiary in your will. A home is one of the most valuable things you can pass on to a loved one. They can then either choose to live there, rent it out, or sell it and use the money for whatever they choose. No matter what they decide to do, you’ll ease some of their financial burdens and give them some peace of mind.
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